Aug 1 (Reuters) - Connecticut expects to end fiscal 2012 with a $120 million deficit, narrower than the $192 million forecast in early July, the state comptroller said on Wednesday.
The deficit for the budget that ended on June 30 will be closed with general fund reserves. There will enough cash left over to transfer $102 million into the Rainy Day Fund, comptroller Kevin Lembo said in a statement.
The data is not yet final.
“This is very common,” said Tara Downes, a spokeswoman for Lembo. “You don’t know what the full accrual amounts are until September.”
Though Connecticut is a wealthy state with a median household income of $67,740, like many states it has not yet shaken off all the effects of the recession.
The state shares the same economic engine as New York -- Wall Street. Lembo said that replenishing cash reserves would help shield the state from the financial sector’s often-volatile performance. Connecticut’s unemployment rate rose to 8.1 percent in June from 7.8 percent in May.
“The state economy continues to recover at a frustratingly slow pace,” he said, urging Democratic governor Dannel Malloy to “begin chipping away at future pension and health-care liabilities.”
Moody’s Investors Service downgraded Connecticut one notch to Aa3 in January, citing the state’s high costs for debt service and retirement benefits, as well as its low pension funding ratios..
In the new two-year budget plan that started on July 1, Connecticut increased the yearly contribution to the pension fund by $100 million, bringing the total to more than $1 billion, which will help reduce future payments.